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When Emails Create Binding Contracts

When is an email not just an email?

Perhaps when it unintentionally acts as your signature and forms a binding contract.

If you send emails regularly for business purposes, you may have run into situations where you question whether an email created a legally binding contract. Maybe you negotiated terms of a deal via email with the intent of having your attorney draft and advise you on an formal agreement, only to have the business on the other side tell you they accept the deal and try to hold your business to those terms.

You may be surprised to know that an email can satisfy the legal requirements of a binding contract–even when a signature is not present. There are also situations where an email can inadvertently modify an existing contract.

More and more commonly, courts are enforcing contracts created in email exchanges. Business owners and employees should be aware of potential situations in which a simple email exchange can create a binding contract.

However, understanding when an email creates a binding contract is not always clear. There are grey areas that can be confusing to parties who are engaged in email communications.

Emails can be considered a contract per the Electronic Signatures in Global and National Commerce Act (ESIGN), and the Uniform Electronic Transactions Act (UETA). It is worth noting that only 47 states have adopted UETA into law, whereas ESIGN is a federal law. Oregon and California are two of the 47 states that have adopted a version of UETA. Washington has not adopted UETA, but did adopt a similar law regarding electronic communication.

What is a valid signature in an email? Ending an email with the sender’s name, including the sender’s name in the subject line, and in some cases, simply having the sender’s name in the “from” line can be considered a valid signature .

How to protect your business

Business owners must understand an email offering an agreement or accepting an agreement can inadvertently create a binding contract. Employers should set clear expectations with employees regarding email communications. When negotiating agreements, the sender of an email should note that the offer or acceptance is subject to legal counsel’s review and a more formal, written agreement.

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